Text: Mobile games, that little thing, Sam, Willow
With the ups and downs of the "roller coaster" mood, the gaming industry staggered through 2023. In the past period of time, changes in policy trends and the strategies of large factories have added a few points to the uncertainty of the domestic market. At this time, people will look overseas to seek a way out, but in fact, the overseas market in the past two years has not been as "glamorous" as imagined.
Take the most intuitive data. According to the "2023 China Game Industry Report" released last month, the actual sales revenue of China's self-developed games in overseas markets last year was 1636.6 billion, down 56%, recording negative growth for two consecutive years. After the consumption of the dividends of the home economy, the process of domestic manufacturers "going out" was suddenly suspended, and even slowly regressed.
Analyzing the situation alone, this trend is actually difficult to perceive: in the past year, popular models such as "Nikke", "Frost Apocalypse", and "Honkai: Star Dome Railway" can still "kill indiscriminately" in major markets and contribute a lot of revenue. But the problem is that these achievements are still normal changes in the stock environment, not new growth points. In Latin America, Southeast Asia, and the Middle East, which are emerging markets with rapid growth, domestic manufacturers are still facing a lot of resistance and have been in a state of stagnancy for a long time.
Theoretically, the product should be the center of the game. However, judging from some cases, while following the footsteps of large manufacturers to R&D, customer acquisition and other routine links, many teams are often caught by a "neglected" detail - and this last hurdle is payment. (We attach a full investigation of this situation at the end of the article "Read the original article").
Overseas payment is not just "sticking a ***".
In the domestic market, where mobile payment is highly popular and channels are relatively concentrated, the cumbersomeness of accessing third-party payment is almost negligible for manufacturers, and there is no need to spare extra energy to research and process. However, in emerging markets with different levels of development, this link will become extremely complicated based on factors such as currency, exchange rate, tax policy, etc., and it is by no means as simple as popping up a "payment code" in front of the user. In a sense, connecting third-party payments is no less important in localization than the product itself.
Some time ago, Gamma Data released a "Research Report on China's Game Overseas Payment" in conjunction with the fintech platform Adyen (the full version is attached to the "Read the original article" at the end of the article). According to the survey, in addition to the unavoidable problems such as lack of local talents and high acquisition costs, regional exchange rate fluctuations and payment-related problems are also the main pain points that plague overseas manufacturers, and the impact is even more obvious than cultural differences and lack of experience.
In the survey on the payment link, there were 636% of businesses believe that users have a poor experience when it comes to top-up payments, and another 576% of enterprises reported that payment security is difficult to guarantee. In addition, including the restrictions on platform payment channels, payment costs, payment compliance, etc., have formed a lot of constraints on the benefits of overseas teams.
What's more, every time you enter an emerging market, you need to spend time and money all over again to develop a payment plan, and the challenges you face in the process are different.
Take the demographic dividend prominently and the fastest growing Southeast Asian market as an example. Although digital reform has made e-wallets one of the mainstream payment methods, due to the popularity of infrastructure and different user habits, there are as many as a dozen mainstream e-wallets in the six Southeast Asian countries, and most of them are backed by official institutions and have strong regional independence. In Indonesia, where credit card penetration is only 4%, for example, if there is no eligible payment channel when clicking on an in-app purchase, user churn will become a serious problem.
The same is true of the MENA region, which has spent a lot of money in the past two years. Although digital payments in the six Gulf countries have developed rapidly after Saudi Arabia's Vision 2030 was proposed, unlike the mainstream market, users in the Middle East are generally accustomed to using bank cards issued in their own countries rather than international cards such as Visa and MasterCard, which provides additional difficulties for channel communication. As for non-GCC countries, for example, the unbanked citizens are as high as 67%, and Apple and Google Pay are not popular in Egypt, which is even more prohibitive for many manufacturers.
It can be seen that, compared with the adjustment of content such as language and culture, the "payment localization" closest to money directly determines whether the product can take root smoothly in the target market, and will also have a greater impact on user experience and retention. Therefore, in recent years, it can be seen that some mainstream markets have stepped in from the legal level to promote the circulation and operation of tripartite payments.
For example, South Korea's "Telecommunications Business Act" amended in August 2021 requires that all apps distributed by app market operators should be able to use other third-party payments within the app, becoming the first country in the world to open third-party payments for Apple appsThe Open App Marketplace Act, passed by the U.S. Senate in February 2022, aims to break the monopoly of app stores on apps and allow open apps to use third-party payments.
But even so, the payment channels that can be covered by most app stores are still limited, especially in emerging markets where the financial industry is "fragmented". If manufacturers rely solely on their own matchmaking to meet user needs, and regardless of cost performance, many small and medium-sized teams themselves may not have the experience and funds to build overseas infrastructure, and even if they have products in hand, they can only "look at the ocean and sigh".
Therefore, how to connect to this last mile is very important for manufacturers to reduce costs and increase efficiency, or expand overseas business. In recent years, major manufacturers such as Tencent and Sanqi Mutual Entertainment have set up their own teams overseas to deal with the risks of non-payment and bad debts in the international payment process, so as to minimize the potential loss of revenue.
For more manufacturers who want to "keep up", how to find an effective "solution" is still a necessary proposition that is difficult to bypass.
Connect to the "last mile".
Of course, the complexity of channels is only one of the pain points in the overseas payment process. In order to truly get through the whole process, it is also necessary to have a sufficient understanding of the policies and regulations in different regions to avoid regulatory risks, and at the same time face a series ......of "old and difficult" problems such as black cards and fraudThe payment process sounds simple, but in fact it is a minefield, which is enough to cause headaches for practitioners.
In the face of an unfamiliar environment, looking for external cooperation has become the mainstream choice. According to the "Research Report on China's Game Overseas Payment", 100% of the surveyed companies have cooperated with 2 or more payment service providers, and even 121% of enterprises cooperate with more than 10 partners, which is almost an indispensable "must".
Compared with slowly groping in the "black box", relying on a payment service provider that specializes in this field can obviously provide a lot of convenience for game companies. Taking Adyen, the partner of the research report, as an example, this kind of mature payment service institutions with acquiring qualifications in various countries can directly connect to the most upstream, integrate multiple currencies and multiple payment methods in the process of third-party payment, and achieve a wide range of coverage for overseas users through this layer of transfer stations, without the need to repeatedly connect with multiple entities, and the cost advantage is quite obvious.
In addition, for the "pitfalls" that most overseas manufacturers may encounter, they are often able to provide targeted solutions.
For example, Adyen has the advantage of local acquiring, allowing companies to view the overall data and the reasons for order failure in the background, and conduct statistics and optimization in a timely mannerIn addition, the success rate of third-party payments can also be effectively improved through various strategies such as network tokens, dynamic 3DS verification, and intelligent payment routing.
At the same time, the platform provides manufacturers with integrated aggregation services for the risks mentioned above, such as differences in payment habits and poor recharge experience of users in different regions, which can access hundreds of local payment methods around the world, and even accurately cover some emerging local payment channels in emerging markets such as Southeast Asia and Latin America, so that users can pay for games in addition to mainstream methods such as credit cards, which greatly optimizes the convenience and process experience of third-party payment.
Coupled with the platform's strict risk control rules, as well as multiple security measures such as machine learning and manual identification, issues such as network security, data protection, and user privacy leakage can basically be kept under ......controlIn an unfamiliar market environment, it is much better to have an additional partner who "escorts" the whole process than to face unknown risks alone.
On the other hand, even in mature markets where mainstream payment platforms are highly popular, third-party payment can still reduce costs and increase efficiency at multiple levels. When users make payments to internal systems such as Apple and Google, the fees charged by the platform are usually as high as 15% to 30%. If the currency conversion in the global market is carried out, the additional fees incurred will even account for 20-50% of the payment cost, which will undoubtedly have a great impact on the company's overseas revenue.
In order to establish a competitive barrier in the channel, platforms like Adyen will offer a corresponding lower expense ratio, which has a certain cost advantage in itselfIn addition, some platforms can also provide enterprises with diversified trading and settlement currencies, as well as original currency settlement solutions covering multiple regions around the world, so as to minimize the cost loss caused by the process as much as possible, so as to make more profits for overseas manufacturers.
As a seemingly "simple" step in the process of going overseas, the impact of the payment link on the manufacturer's revenue is obviously much greater than many practitioners recognize. The CTO of a leading overseas team once said that "payment optimization is the link with the highest ROI return in the existing slowing growth environment". From this point of view, it is not difficult to understand that payment service providers will become so sought-after, and even become a rigid need for game companies to compete for cooperation.
Another compulsory course to go to sea
Judging from the best of the best, after the blowout outbreak in the early years, the overseas market has faced a new round of reshuffle. In the increasingly fierce stock competition environment, the focus of many overseas manufacturers is not only chasing the "outlet", but also exploring the "refined operation" more deeply, trying to improve the success rate of products in overseas regions from another dimension.
In the past, we often talked about the importance of doing a good job of localization, such as language translation, religious taboos, pop culture, etc., in order to capture the preferences of overseas players and drive product revenue. However, few people will mention that in addition to game content and marketing, the most closely related to "money" is, in the final analysis, the payment link that most people ignore. After gradually understanding the impact of overseas payment on going overseas, overseas manufacturers are bound to pay more attention to this key business in the future.
Especially for manufacturers aiming at emerging markets, or small and medium-sized teams with little experience in going overseas, simply focusing on art, concept packaging and other aspects of "toughness", trying to copy the successful model of overseas popular models, not only is it difficult to control costs, but also may not be able to reap much results within their own capabilities. In contrast, infrastructure links such as payments can sometimes become a "fulcrum", which can effectively leverage revenue with only a small investment, allowing the game to gain a foothold in the target market.
In addition, in the environment where overseas products frequently adopt multi-terminal routes, once they are separated from the stable and ready-made payment environment of mobile Apple and Google, the process of self-built recharge channels will inevitably be unavoidable. For game companies that rely more on third-party payment methods, how to screen external platforms and improve the survival rate of products through cooperation may become a compulsory course for future overseas business development.